What Are Modern Retail Fulfillment Techniques?
Tuesday, March 19, 2019

Modern Retail Fulfillment Techniques

Retail fulfillment is the transfer of goods to a customer after they have purchased products. The simple case is the ‘store purchase’, where fulfillment takes place immediately. However, modern retail adds significant variations to the retail fulfillment equation. Today, there are several means of using the supply chain to deliver merchandise to a shopper.

7 Modern Retail Fulfillment Techniques:

1. Store Fulfillment

Today, there are several means of using the supply chain to deliver merchandise to a shopper.As pointed out above, direct in-store retail fulfillment is the easy case. Despite being obvious we would be remiss not to point it out. Here the customer walks into a physical store. They browse. Find items they like. Then they proceed to pay for them at the POS (Point of Sale) or cashier. In this case, the merchandise is in hand, paid, and the consumer walks away with their goods.

2. In-Store Pickup

Already popular in Western Europe, in-store pickup is growing throughout the retail spaces. Known as BOPIS (Buy Online Pickup In-Store) or Click & Collect, it is an omnichannel approach. The customer researches, finds, and buys their goods online. Then, rather than waiting for the items to be delivered, they opt to pick up their goods at a store. Today, merchants vary wildly in their offers of the service. As an example, the chart below shows Click & Collect adoption by country.

Retail fulfillment - Click & Collect Adoption by Country
Source: OrderDynamics, Omni-2000 Research: Global

This form of retail fulfillment has been growing strongly. Popularity is ballooning with shoppers. Greg Buzek, CEO IHL points out, “the area of greatest growth in retail – Buy Online and Pickup in Store (BOPIS) which is up over 46% of the holidays.” (source: BOPIS: State of the Industry) Buzek’s comments focus on the North American market – highlighting a gap. Despite a growing demand for these retail fulfillment services, there is a shortfall in many retail markets. It highlights an opportunity gap for merchants.

3. Ship-From-Store Fulfillment

Ship-from-store lets a retailer use store inventory, instead.Online orders are usually shipped ONLY from warehouses. Ship-from-store lets a retailer use store inventory, instead. It does require some pick and pack capacity in stores. It does need some room for packing and shipping customer orders. Fortunately, in most cases, it saves shipping costs as stores are generally closer to customers than warehouses. It also helps the store as they will have:

  • Fresher stock (higher inventory turnover)
  • Less pressure to discount goods
  • Better sell through metrics

4. Drop Shipping

Drop shipping is all about letting the manufacturer ship items directly to customers. Many e-tailers gravitate to this model. As a retail fulfillment method, it does not need the merchant to hold inventory. There is no need for the retailer to even handle delivery logistics. It is a good option for retailers to have – when they need it. On the downside, it can be expensive. This all depends on the merchant’s volumes, terms of service, and margins.

5. Third Party Fulfillment (3PF)

Third party fulfillment (3PF) is a new-ish retail fulfillment option. In this case, a retailer may send ordered items to a 3PF near a customer for a pickup. It can be as simple as partnering with a corner store. It might be a pickup center at a mall, or it could be a specialized provider with pickup points in various locations. An example is Penguin PickUp. They provide pickup points as a service in malls and convenient inner city pickup locations.

6. Pickup Innovations

Retail Fulfillment and the Last Mile Robots
Source: Photo, Robby Technologies

Fortunately, we are at a point where there are many innovations in retail fulfillment. Retail fulfillment’s last mile is expensive for retailers and logistics companies, alike. But, there are futuristic options. Pepsico has been experimenting with delivery bots, for example. There are visions of self-driving mobile stores that come to the user. Also, let us not forget about drone delivery. All good and all fascinating.

A near term, practical innovation is Purolator’s Mobile Quick Stop option. Here Purolator took a few of its decommissioned delivery trucks and repurposed them for mobile pickup points. Customers can have goods delivered to a truck, that locates at high-density locations at fixed times of the day. For example, at a business center (cluster of office buildings). Or the stop may be at a train station for the after-work commute. All convenient to the customers.

7. In-Store Lockers

Source: Photo, Bell & Howell

Another innovation that is quickly gaining steam in North America is the pickup lockers. Bell and Howell are the industry experts at this rising technology. It allows customers to pick up their goods, with much greater speed and ease. There is rarely a lineup for this pickup. Automation here speeds the process, which ultimately means better customer service. Watch for them, as we have spotted them at Walmart and Canadian Tire stores – with more to come.

 

 

Bringing it All Together

Getting retail fulfillment right, and doing it efficiently is critical to retailers. There are many different options, approaches and strategies. So many in fact, that we practically have custom order fulfillment options. But, the important part is to make sure it is all blended into a seamless omnichannel option. Regardless of the sales channels, or products offered, it has to be a single, smooth customer experience. What ties it together is the retail order management technology. It is also known as a DOM (distributed order management system). Yes, a DOM gives you inventory management, order routing, order orchestration, and many other powerful functions. But, beyond all of that – it is the heart of unified commerce. It is the key part of making the retail fulfillment part of the buying journey. And, it is about making that shopping journey, seamless, easy, and natural.

 

Author: 

Charles Dimov, VP of Marketing at OrderDynamics

Charles Dimov is VP of Marketing at OrderDynamics. Charles has 23 years experience in Marketing, Sales and Management across various IT and Technology businesses. Previous roles include Chief of Staff, Director Product Marketing, and Director Sales. Charles has held roles in brand name firms like IBM, Ericsson, HP, ADP, and OrderDynamics.

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